Gaither v. Mumford, 4 N.C. 167, 1 Taylor 167 (1817)

July 1817 · Supreme Court of North Carolina
4 N.C. 167, 1 Taylor 167
GAITHER against MUMFORD

GAITHER against MUMFORD.

^THIS was an action of detinue, for a negro, tried before Lowrie, J. at Rowan Superior Court, where a ver-diet, under the charge of the Court, was found for the _ . . 0 . Plamtiff; and, upon a motion for a new trial, the case was referred to this Court. The material facts, as tracted from the record, are as follows.

Bryant was indebted to Pearson, who recovered two judgments against him, on the 30th December, 1811, V . r 1r , ,, lore a magistrate, for tab sum of sixty seven dollars, Bryant stayed the executions, giving the Plaintiff security £or the debts, and to indemnify him, executed an lute bill of sale to him for the negro sued for, on the day after the judgments were recovered.

Where tbs Soe^nouic, y,mPanv atl4 follow the ti-tie, the trans-If an absolute deed s made telde ⅛ made at the same time, not ope-mortgage, to the prejudice oi third prisons*

*168At the same time, the Plaintiff executed to Bryant an ⅛® strument under seal, whereby he ácknowleged the purpose for which the bill of sale was made, and promised to surrender it, under a penalty of four hundred pounds, provided Bryant pa'id the judgments on or before the 1st January, 1814. Both the above instruments Were drawn by a person who was keeping store for the Defendant. ;

Bryant, at this time, was indebted to the Defendant, who, in the following February, warranted him, and having recovered judgment, had the execution levied upon the negro, then in Bryant's possession, having so continued from'the date of the bill of sale. The negro was^k sold and the Defendant became the purchaser, to; whom the constable made a bill of sale, and who then took the negro into possession, and had huh when the suit was ^brought. The bill of sale to the Plaintiff, as well as that to the Defendant, was duly proved and registered ; but the bond from the Plaintiff to Bryant was proved and registered on the day the trial took place in the Superior Court. The Defendant knew of the conveyance to the Plaintiff, and of the bond, before he sufed out his exei cution. '' '" ' '1 ’ ■ 1 ’ ' \ ‘ ■ - ■- ■

A. Henderson, for the Defendant.

It is now settled, that unless possession accompanies and follows the deed, it is not merely the evidence of fraúdj but is fraudulent per se. * The deed from Bryant being absolute on the face of it, left the property liable to the demands of any of his creditors who found it in his possession.' The particular agreement between him and the Plaintiff, contained in the bond, could not affect the rights of Others. But if it had been annexed to the bill of sale, and recorded with it, it would have amounted to no more than a mortgage; and possession belongs to the mortgagee as much as to a vendee. This appears from Ryall v. Roll.† ' There is no agreement in the bond, that the possession is to be retained by Bryant; and, unless a *169different’ provision had been made in that instrument, the right of possession belonged to Gaither. * Whatever character the feond may give to the transaction, as between “ . the parties themselves, it cannot make it a mortgage as to others ; for the very circumstance of separating the de-feazance from the deed, is indicative of fraud.†

iMurphey, for the Plaintiff.

, Where there is an absolute bill of sale, Í agree that it is fraudulent in the vender to retain possession ; it i* then a legal fraud. But where there is a mortgage, », condition, or a trust, it is then an inquiry for the jury tmdef all the Circumstances. This will appear from one of the cases cited on the other side. Ryall v. Roll, ‡ was on a mortgage; and Mr. justice Burnet4 in giving ¿pinion, says, “ Courts of Equity and juries are to con» sider, upon the whole evidence, whether the conveyance Was made with a view to defraud or not.” In the same case, Chief Justice Lee says, “ At common law, it was left to juries to consider whether conveyances of this sort were fraudulent against creditors or not.’*

All the cases cited on the other side, to prove that the mortgagee of a chattel land is entitled to the possession, are constructions upon the bankrupt law,§ which, in that particular, altered the common law» In Stoné v. Graham, ǁ X.ord Coke says, “ The possession of the mortgagor is fraudulent; but if it had been an absolute conveyance, it would have been fraudulent.” And upon -this being cited in Ryall v. Roll, arising under the bankrupt act, the Chief Justice rejects it, because it was, founded upon the common law and the statute of Elizabeth, the plan of which statute differed from that of Jac. 1. In fact, the latter statute expressly gives power to the commissioners to sell property assigned by the bankrupt, but remaining, in his possession ; from which the inference is, that without such power, the bankrupt’s remaining in possession *170Would not have avoided the conveyance. But" I ⅜⅛⅛¾' that where the conveyance is absolute, the modern decisions on the common law and, the statute of Elizabeth are too strong to be resisted. In mortgages, however, the continuance of possession in the mortgagor is no badge 6f fraud, within the statiite of Elizabeth*

Taylor, C. J.

The bill of sale purports fb convey ⅜⅛ absolute property in the slave, while, by a separate deed made at the saihe time, the title of the Plaintiff is liable to be defeated, upon Bryant's' paying the amount of the judgments. To separate the defeazance from the deed, is always a suspicious circumstance.† . Both deeds were registered within the time required by law, vet the latter not being registered until the moment of trial, is strongly indicative of a wish in the parties to cover half the transaction with tfie veil of secrecy. This is one of the badge® of fraud in Txvyne's case.‡ The Plaintiff may be consi* dérerl in the light of a creditor of Bryant's who, by being permitted to retain the possession contrary to both deeds, Was thus enabled by the Plaintiff to gain a delusive ere* dit, and thereby impose on third persons. From these special circumstances in the caste.‘my opinion is’J that tfi'e Plaintiff is not entitled to'recover ; for, had the transaction been fairly designed, it would have been perfectly easy tó baVe aecompFished every justifiable object, and to have provided, at the same time, for Bryant's ^njoyment of the property*

I must acknowledge, that my mind hesitates in adopt-fng the rule in the" extent it is laid down $t the bar, angí as' it is supported by respectable authorities, both British and American, that where possession does-not accompany and follow the deed, it is fraudulent in law. Nor can I reconcile with that rule, the case of Kidd v. Rawlinson,§ where the title was in one person and the possession in another, yet it was left to the jury to decide, Whether, unilerallthe circumstances, the transaction was .'frauda**" *171tent? Lord Elden, in giving his opinion in that case, cites Buller’s Nisi Prius, 258, and adopts the dqctrine, ■“ the donor’s continuing in possession, was not, in all cases, a mark of fraud ; as where a donor lends his donee money to buy goods, and at the same time, takes a bill of sale of them for securing the money.” Thefe were certainly many stfong circumstances in the case, tending to show that the transaction was fair, and that third persona could not be imposed upon by it; but if such circumstances can be enquired ipto, it proves that the terms, ini which the rule is laid down in the cases cited, are too unqualified.

Daniel, J.

The bill of sate made by Bryant Jo Gaither, and the bond bearing even date with it, which was executed by Gaither to Bryant, conditioned to re-convey the negro on Bryan?s saving him harmless by paying the judgments which Pearson had obtained against Bryant, was, as between the parties to it, a mortgage, and as to them, it was quite immaterial whether the had been registered or not.*

But, as the bill of &ale Was absolute on its face, and recorded in this situation, without the defeasance, it is to be considered by all the rest of the world, as absolute« Were that not the case, it,would, in numberless instances,, place creditors and purchasers in great perplexity and difficulty.', It is more consonant to justice, that he who would take a bill of sale, in the way the'Plaintiff did in this case, should sustain the loss, than a bona fide purchaser under an execution, or from' the vendor himself | who has been permitted to retain the possession.

To all the world but the parties, this bill of salé must be considered absolute;'and, as the property did not follow and accompany the deed, the transaction is perse fraudulent.† As the act was fraudulent, and void to all persons who were not parties to it, the circumstance of *172the D'eféndánt’s- having notice of both the bill of salé a«€ bond to re-convey, can make no diíferenée.

Rufi-in, J.

I do not think it necessary to decide &e question raised in this cause, whether the^possession of a chattel remaining in the mortgagor after the execution of a mortgage, constitutes, per se in point of law, a fraud ; as Í am of opinion that we are not to look upon this transaction as a mortgage. Between the parties to it, I suppose it would be such; but as to third persons, it clearly i^ not: The deed is absolute upon the face. In that shape, it is spread on record; the public see it so, and know, and can know nothing to the contrary ; because the bond or defeasance, as it is called, is not an instrument, which the law directs or authorises to be registered. It is concealed, until the party is compelled to produce it, by a seizure of the goods by a creditor. It then comes to light, and contradicts what the deed has before said. Surely such a contrivance fo£ entrapping innocent people, cannot be supported, under the notion that it forms a mortgage. In these two papers, different languages - are spokenboth cannot be right:—one of them must be false ;—and take which you will, it equally is a fraud. This defeasance, to my mind, instead of making the vendor’s possession consistent with his deed, and thereby fair, evinces his guilt,-—by making it more difficult to detect the fraud. It is a cover to a foul transaction, and not the evidence of a fair one. Even if the parties clearly intended a mortgage, they have so framed it, that to the world, it tells a falsehood ; and the truth only to themselves. It is too late to disclose the truth, after the injury arising from the secrecy has been sustained. But it is said, that the Defendant had notice of these deeds. That makes no differencb» The law makes the deed void; and what is void, may tafeen advantage of by ail of Bryant’s■ creditors.

*173' -Taking Ae deed to -be absolute, upon Ae authorities cited by my Brother Daniel, and the case of Hamilton v. JSussell,* it is fraudulent in law, and ought so to have , been pronounced by the Court.

Wherefore, there must be a nonsuit.

The rest pf the Court concurred.